Futurisation is the current buzz word in the swaps market. I’ll let Bloomberg explain:

On Friday, Oct. 15, a rule designed to improve [US] government oversight of the multitrillion-dollar market for derivatives took effect. The following Monday, many energy traders moved their swaps business to a futures exchange. After the U.S. Commodity Futures Trading Commission put two years into building its regulatory framework for swaps, a slice of the market simply sidestepped it.

Really, you have to applaud. The market noted that the margin period of risk for futures was one day, compared to five days for a swap, and that futures did not have onerous block trading or regulatory capital requirements. So, with the flick of a pen, they started trading futures on swaps rather than swaps. A future on something, you see, is a future for regulatory purposes, not a something. Futures on CDS on ABS anyone? No, really, c’mon never mind the quality feel the margin…